In Search of Digital Excellence: exceeding the customer experience challenges in the insurance industry

In Search of Digital Excellence: exceeding the customer experience challenges in the insurance industry

14-Nov-2017 by Sabine VanderLinden

First published in 1982, more than 35 years ago, In Search of Excellence, by Tom Peter and Robert H Waterman Jr became one of the biggest selling business books ever. This book was used by countless universities, business schools and businesses worldwide as the bible to business management. It can be argued that this book single-handedly changed how businesses viewed customer experience forever.

Today in this fast-changing digital world, the ethos at the heart of the original In Search of Excellence holds no less importance. The eight common themes of successful business continue to be relevant (despite many of the companies they researched no longer being around) generally in all business and specifically across our industry. This book came back to mind when reading the recent 2017 Global Research Report from the excellent team at InsuranceNexus [1] (cross industry, cross department, cross function, cross geography research). This detailed report highlights the greatest challenges faced by our industry. For the purposes of keeping this article short however let’ s just look at the top three external and internal challenges for now.

Top 3 External Challenges identified:

  1. Technological advancement
  2. Changing customer expectations
  3. Digital channel capabilities

The interpretation of these results (and there is much more detail worth reading in the complete report) is that the interface between the customer and the insurer will be one of the key competitive battlegrounds. This is the case not just from the customer facing side of an organization but across the organization as a whole and the need is to make every part of the business work for the customer. This is the challenge that is recognized in ‘digital transformation’, a much-used term that has to mean more than just delivering digital transformation to the customers, no, it must mean delivering transformation across the entire business. It is not just customers who have high digital expectations, employees do too.

Top 3 Internal Challenges identified from the research:

  1. Lack of innovation capabilities
  2. Legacy systems
  3. Finding and hiring talent

These illustrate not a lack of will by the industry to innovate (lack of company investment scored very low in of the list of challenges) but that the ability of the organization to execute innovative strategies is often hampered by legacy systems and the ability to attract the right people to drive the change.

In fact, with both the external and internal challenges identified, it is clear the challenge for our industry is not the intention or the levels of investment, but the capability to make it happen. Which brings us back to the original book, In Search of Excellence and its eight tenets of successful businesses.

As a quick reminder, in the original book Peters and Waterman based one chapter on each of their core themes as follows: –

  1. A bias for action, active decision making or “getting on with it”
  2. Being close to the customer – learning from the people served by the business
  3. Autonomy and entrepreneurship – fostering innovation and nurturing champions
  4. Productivity through people – treating rank and file employees as a source of quality
  5. Hands-on, value-driven – the management philosophy that guides everyday practice
  6. Stick to the knitting – stay with the business you know
  7. Simple form, lean staff
  8. Simultaneous loose-tight properties – autonomy in shop-floor activities (in the case of insurance autonomy in functional units) plus centralized values

So, in the search for digital excellence it is worthwhile considering the eight original themes and applying them to the insurance industry’s top external and internal challenges.

First let’s take a more detailed look at the top three internal challenges focused on the people, skills shortages and technology. All of these affect the ability to make the changes we want to happen; they impact the ability to deliver digital disruption. This is often because fresh, young talent is attracted to new ways of working and well-articulated business values – dress down, fun environment, less restrictive working schedules. Therefore, it is important to think about how we create a culture that supports flexible working, action and active decision-making; that creates an environment for entrepreneurship and provides the infrastructure to deliver high productivity levels.

We are certainly starting to see this happen within the largest enterprises that are developing spin-off, digital only businesses outside the existing business, such as Aviva and AXA’s Kamet or participating to innovation-programs that accelerate learning and collaborative engagement. They do this in order to hot house innovation, speed up the products to market that customers are demanding. This enables the largest and longest standing companies to compete head-to-head with the digital disrupters from the get-go, the start-ups that are nibbling at their heels or leverage the so needed capabilities designed by those fast moving innovators. It will be interesting to see how these spin-off businesses develop over the next few years with the benefit of experience of ‘sticking to the knitting’ whilst adopting a fast mover culture of innovation and agility.

For the external challenges faced by all the researched companies, the In Search of Excellence themes of being close to the customer, needing a hands-on value driven culture and ‘sticking to the knitting’ should be considered. It is easy to drift off into areas of the unknown in response to nimble competition, but the main message is always to be the best in what you know and to focus on achieving this. This is the reason we always ask the start up ventures that we work with to discover truly what the customers want and validate this through iterative test and learn activities.

Being close to the customer nowadays is more critical than ever. Their digital adeptness, ability to research, and test and speed to complain (globally if necessary) puts them in a position of authority and influence that we cannot control. Therefore, it is important to stay one step ahead and delight your customers at every step of their interaction. Even though the shape and origination of some insurance products and services will change in the future, we cannot forget that insurance is a grudge purchase and that anything done to make it a pleasant experience will help. In the InsuranceNexus Report, I state that “…even though different markets seem to focus on a variety of distinct priorities, it’s clear many insurers place the customer at the heart of their strategies, whether through analytics, digital processes, mobile-first platforms or enhanced distribution capabilities. In each situation, technology is at the core of such digital innovation. Culture and mind-set may be the two elements that slow success.”

Technological advancement, as always, underpins all the industries challenges in one way or another and will be the theme of many articles to come. Being on top of changing customer expectations and making every customer experience a positive one through every channel across the business must be at the core of all strategies.  As stated within the InsuranceNexus report, “technology has always been a key enabler within the insurance sector. In today’s highly customer-centric world, organisations that want to thrive, will do so through digital excellence; that by combining unique customer experiences and omni-channel distribution mechanisms, as well as by reinventing interactions across the insurance value chain, excellence can be achieved despite legacy constraints.” In short, we can all achieve digital customer excellence if we remember the core tenets of achieving business excellence first identified way back in 1982.

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[1] InsuranceNexus Global Trend Map 2017 – Alexander Cherry

Sabine VanderLinden

Managing Director of Startupbootcamp InsurTech